Orsted · OMXCOP:ORSTED
Orsted — Ørsted — Q4 2022 Earnings Presentation
45 slides from Orsted's earnings presentation, Feb 1, 2023
Slide 1: Investor presentation Q4 2022
Investor presentation Q4 2022 1 February 2023
Slide 2: Disclaimer
DISCLAIMER This presentation contains certain forward-looking statements which include projections of our short- and long-term financial performance and targets as well as our financial policies, including but not limited to, the statements and expectations contained in the “Financial Outlook” secti
Slide 3: Strong operational performance and significant strategic progress
Strong operational performance and significant strategic progress Offshore Renewable capacity • Commissioned Hornsea 2, the world’s largest operating offshore wind farm GW, gross Ørsted pipeline • First power at Greater Changhua 1 & 2a increased >25 % • FID on first utility scale US offshore wind pr
Slide 4: Significant political support for accelerated renewable build-out
Significant political support for accelerated renewable build-out Ørsted is well-positioned to tap into political support with a portfolio spanning several renewable technologies across key growth markets • ‘Fit-for-55’ focus on enabling carbon emissions reduction through increased build-out of rene
Slide 5: Continued acceleration of annual build-out of offshore wind
Continued acceleration of annual build-out of offshore wind > 25 GW expected to be auctioned 2023 Offshore build-out, excluding China mainland Installed capacity, GW Europe +33 GW p.a. Asia Pacific H1 2023 2023 Americas H1 2023 H2 2023 334 New York 3 ORESS 1 Taiwan auction Massachusetts 4 2,000 - 4,
Slide 6: 2022 guidance delivered with different earnings composition
2022 guidance delivered with different earnings composition Achieved guidance in 2022 Group EBITDA DKKbn • EBITDA including new partnerships amounted to DKK 32.1 bn, a 2022 guidance of record-high EBITDA New partnerships DKK 21-23 bn • EBITDA excluding new partnerships of DKK 21.1 bn, exceeding Excl
Slide 7: Net profit, ROCE and Equity
Net profit, ROCE and Equity Net profit Greather Changhua 1 ROCE Equity Equity excl. hedging reserves farm-down DKKm %, last 12 months DKKbn Hedging reserves 3,258 16.8 53.8 95.5 14.8 120.1 122.0 3,211 -26.5 47 -66.3 -329 Q4 2021 Q4 2022 31 Dec 2021 31 Dec 2022 30 Sep 2022 31 Dec 2022 Net profit of D
Slide 8: Net interest-bearing debt and credit metric
Net interest-bearing debt and credit metric Net interest-bearing debt FFO / Adj. net debt Q4 2022, DKKbn %1 45.7 43 9.8 30.6 -1.0 26 -3.1 -20.9 30 Sep 2022 CFO Capex Partner’s share Other 31 Dec 2022 31 Dec 2021 31 Dec 2022 of Capex Net interest-bearing debt of DKK 30.6 bn, down DKK 15.1 bn FFO / Ad
Slide 9: Non-financial ratios
Non-financial ratios Taxonomy-aligned KPIs Green share of energy generation Safety %, YTD %, YTD Total recordable injury rate, YTD 90 91 3.0 3.1 Revenue OPEX 73 80 31 Dec 2021 31 Dec 2022 31 Dec 2021 31 Dec 2022 EBITDA CAPEX Green share of energy at 91 % TRIR of 3.1 • More wind and solar assets in o
Slide 10: Previous power price hedging approach no longer fit-for-purpose
Previous power price hedging approach no longer fit-for-purpose Minimum hedging requirements in previous approach was too A set of criteria has been established to design the new hedging high in volatile markets framework GBP/MWh, UK power spot price monthly average Protect results against downside
Slide 11: Portfolio revenue uncertainty
New approach better suited for the characteristics of our portfolio Lower hedge level and shorter time horizon. Hedge level of Hedge level will depend on portfolio composition merchant exposure between 0-70 % in Y1 & Y2 • Leveraging portfolio diversification as natural hedge between price • Risk of
Slide 12: 2023 guidance & financial estimates
Gross Inv. pending 2023 guidance Capital Markets Day & financial estimates Save the date - 8 June 2023 2023 guidance DKKbn EBITDA (excluding new partnerships) 20 – 23 Gross investments 50 – 54 Financial estimates Target Year Fully loaded unlevered lifecycle spread to 150-300 bps Continuous WACC at t
Slide 13: Q&A
Q&A DK: +45 78 76 84 90 UK: +44 203 769 6819 US: +1 646 787 0157 PIN: 994005 For questions, please press 5*
Slide 14: Appendix
Appendix Orsted
Slide 15: Forecasted renewable capacity build-out
Forecasted renewable capacity build-out Global renewable energy capacity Global offshore wind capacity North American renewable capacity by technology1 excl. mainland China by technology2 GW installed GW installed GW installed CAGR 2 % biomass Americas Biomass 32% Batteries Asia Pacific +26 GW/year
Slide 16: Renewable capacity as of 31 December 2022
Renewable capacity as of 31 December 2022 Indicator, MW, gross FY 2022 FY 2021 Δ Installed renewable capacity The installed renewable capacity is calculated as the Installed renewable capacity 15,121 12,977 2,144 cumulative renewable gross capacity installed by Offshore, wind power 8,871 7,551 1,320
Slide 17: Ørsted construction programme and pipeline
Ørsted construction programme and pipeline Gross renewable capacity MW 2,852 65 30,683 2,147 Offshore 1,498 Onshore 1,045 Other (incl. biomass and P2X) 920 3,214 6,312 1,628 1,751 72 19,461 1,166 130 321 2,147 900 15,121 2,075 6,247 4,175 22,224 11,067 8,871 Installed Greater German South Onshore So
Slide 18: Offshore wind build-out plan
Offshore wind build-out plan Installed capacity MW 2,852 22,224 Under construction 1,498 Awarded 1,045 920 3,214 1,628 1,166 130 11,067 900 8,871 Installed Greater German South Decided US North- US Mid-Atlantic Greater Baltica Baltica Hornsea 3 Decided capacity Changhua Portfolio1 Fork Wind (FID’ed)
Slide 19: Onshore build-out plan
Onshore build-out plan Installed capacity MW Under construction 471 50 25 29 16 6,247 600 250 201 430 4,175 Installed Old 300 Helena Energy Sunflower Eleven Mile Mockingbird German French Irish UK Decided Capacity Center1 portfolio3 portfolio4 portfolio5 portfolio6 (FID’ed) and Q4 2022 installed cap
Slide 20: Offshore market development – UK, Ireland and Isle of Man
Offshore market development – UK, Ireland and Isle of Man • UK Government increased in April 2022 the ambition of offshore wind to 50 GW by 2030, including 5 GW of floating offshore wind to reduce reliance on imports and improve energy security • Commitment to decarbonise electricity system by 2035
Slide 21: Offshore market development – Continental Europe
Offshore market development – Continental Europe • New government has ambitions to increase offshore wind targets to 30 GW by 2030, 40 GW by 2035 and 70 GW by 2045 Germany • Tender volumes for 2023 have been increased to 9 GW and are expected to be allocated in auctions including both price and qual
Slide 22: Offshore market development – US
Offshore market development – US • Target of 5.6 GW offshore wind by 2027 of which 3.2 GW has already been awarded, through and including Dec. 2021 awards Massachusetts • Next auction expected in 2023 • Target of 2 GW of offshore wind capacity by 2030, of which 1.2 GW remains available Connecticut •
Slide 23: Offshore market development – APAC
Offshore market development – APAC • Taiwan has met its target of awarding 5.5 GW to be commissioned by 2025 • More than 3 GW of developing pipeline in preparation to participate future auctions Taiwan • Third round auction announced with 15 GW offshore wind target to be constructed from 2026-2035,
Slide 24: Offshore seabed competition
Offshore seabed competition Ongoing H1 2023 2023 Poland Gulf of Mexico Gibbsland 11 - 13 GW ~8 GW TBA Ongoing 2023 2023 Scotland INTOG 1 Oregon Celtic Sea floating ~3 GW 4 GW 1. Scotland Innovation and Targeted Oil & Gas Decarbonisation 24 All timelines and capacities based on authorities communicat
Slide 25: Signals for significant market growth within renewable hydrogen & e-fuels
Signals for significant market growth within renewable hydrogen & e-fuels Ørsted Power-to-X highlights during Q4 2022 Maturing a 3GW+ pipeline across a portfolio of project opportunities National & cross-national ambition setting Final investment decision taken on FlagshipONE 12 new countries announ
Slide 26: ESG Performance
ESG Performance Total heat and power generation FY 2022 Greenhouse gas emission intensity Scope 3 greenhouse gas emissions, Energy source, % g CO2e/kWh million tonnes CO2e Other scope 3 emissions Natural gas sales Offshore wind 39 Total scope 3 -90 % gas Onshore wind 27 -87 % -50 % all scope 3 produ
Slide 27: Sustainability leadership in Ørsted
Sustainability leadership in Ørsted Globally recognised sustainability leadership ESG rating performance Our reporting Net-zero in 2040 across scope 1-3 Annual report Rating agency Score Benchmark First energy company in the world with an approved science-based 2022 net-zero target for the full valu
Slide 28: Our strategic sustainability priorities & targets
Our strategic sustainability priorities & targets Science-aligned climate Green energy in that revives A green transformation that Governance that enables the action nature works for people right decisions Aspiration Aspiration Aspiration Aspiration We scale our green energy business We work to ensu
Slide 29: Q4 and FY 2022 EBITDA
Q4 and FY 2022 EBITDA Q4 EBITDA excluding new partnerships FY EBITDA excluding new partnerships DKKbn DKKbn Q4 2021 5.0 FY 2021 15.8 Wind 0.2 Wind 1.7 Hedges -0.7 Hedges -3.7 Sites, other 0.2 Sites, other -1.2 Existing partnerships -0.1 Existing partnerships 2.3 Other incl. DEVEX 0.3 Other incl. DEV
Slide 30: Group – Financial highlights
Group – Financial highlights Financial highlights Q4 2022 Q4 2021 D FY 2022 FY 2021 D EBITDA DKKm 6,696 8,253 (19 %) 32,057 24,296 32 % - New partnerships 77 3,211 (98 %) 10,993 8,507 29 % - EBITDA excl. new partnerships 6,619 5,042 31 % 21,064 15,789 33 % • Offshore 2,094 5,244 (60 %) 19,569 18,021
Slide 31: Offshore – Financial Highlights
Offshore – Financial Highlights Financial highlights Q4 2022 Q4 2021 D FY 2022 FY 2021 D EBITDA DKKm 2,094 5,244 (60 %) 19,569 18,021 9% • Sites, O&Ms and PPAs 3,746 3,983 (6 %) 9,940 13,059 (24 %) • Construction agreements and (715) 2,469 n.a. 12,277 7,535 63 % divestment gains • Other, incl. proje
Slide 32: Onshore – Financial Highlights
Onshore – Financial Highlights Financial highlights Q4 2022 Q4 2021 D FY 2022 FY 2021 D EBITDA DKKm 852 530 61 % 3,644 1,349 170 % • Sites 420 211 99 % 2,097 535 292 % • Production tax credits and tax 712 480 48 % 2,556 1,382 85 % attributes • Other, incl. project development (280) (161) 73 % (1,009
Slide 33: Bioenergy & Other – Financial Highlights
Bioenergy & Other – Financial Highlights Financial highlights Q4 2022 Q4 2021 D FY 2022 FY 2021 D EBITDA DKKm 3,609 2,416 49 % 8,619 4,747 82 % • CHP plants 1,718 1,715 0% 5,851 3,202 83 % • Gas Markets & Infrastructure 2,073 770 169 % 3,117 1,829 70 % • Other, incl. project development (182) (69) 1
Slide 34: Liquidity reserve significantly above target
Liquidity reserve significantly above target Collateral and margin postings, Liquidity reserve DKKbn DKKbn 30.6 97.8 88.0 11.8 14.1 43.2 10.1 3.1 18.4 6.5 9.7 4.1 0.4 1.3 -0.6 Dec 2021 Sep 2022 Dec 2022 Dec 2021 Sep 2022 Dec 2022 Initial margin Cash, available Variation margin Securities, available
Slide 35: Debt and hybrids overview
Debt and hybrids overview Total gross debt and hybrids Effective funding costs – Gross debt Maturity profile of gross debt 31 December 2022, DKKbn DKKbn >95 % of gross debt (bond and bank loans) fixed interest rate. Remainder floating or inflation-linked 28.5 3.8% 10 % 3.3% 3.3% 3.1% 24 % 2.8% 2.7%
Slide 36: Currency and energy exposure
Currency and energy exposure Currency exposure Q1 2023 – Q4 2027 Energy exposure Q1 2023 – Q4 2027 DKKbn DKKbn Before hedging Before hedging After hedging After hedging 106.0 45.9 40.3 13.9 7.7 7.7 1.0 6.7 5.9 0.0 -12.8 -1.0 -0.1 -0.1 GBP1 USD2 NTD2 Power Gas Oil Spread Risk after hedging, Effect of
Slide 37: Hedging levels
Hedging levels Hedging level of total exposures1, as of 31/12/2022 Offshore 85% 71% 53% 22% 22% 2023 2024 2025 2026 2027 Onshore 65% 64% 60% 59% 60% 2023 2024 2025 2026 2027 Bioenergy 14% 9% 1% 2023 2024 2025 Group2 72% 71% 59% 39% 36% 2023 2024 2025 2026 2027 37 1. Exposure is calculated as the exp
Slide 38: Capital employed
Capital employed Capital employed, DKKm FY 2022 FY 2021 Capital employed by segment %, FY 2022 Intangible assets, and property and equipment 181,694 162,939 Offshore Assets classified as held for sale, net Onshore - 860 Bioenergy & Other Equity investments and non-current receivables 996 828 Net wor
Slide 39: Taxonomy-aligned KPIs
Taxonomy-aligned KPIs Unit FY 2022 FY 2021 D Revenue DKKm 132,227 77,673 70 % Taxonomy-aligned revenue % 73 66 7 %p - Taxonomy-aligned revenue adjusted for green bonds financing % 71 - - Taxonomy-non-eligible revenue % 27 34 (7 %p) - Gas sale % 16 21 (5 %p) - Coal-based activities % 4 2 2 %p - Other
Slide 40: FFO/Adjusted net debt calculation
FFO/Adjusted net debt calculation Funds from operations (FFO), DKKm1 31 Dec 2022 31 Dec 2021 EBITDA 32,057 24,296 Change in provisions and other adjustments (2,213) (422) Change in derivatives (8,687) (2,050) Variation margin (add back) 10,332 (627) Reversal of gain (loss) on divestment of assets (1
Slide 41: Hybrid capital in short
Hybrid capital in short Hybrid capital can broadly be defined as funding Due to hybrid’s equity-like features, rating Accounting treatment instruments that combine features of debt and agencies assign equity content to the hybrids when • Hybrid bonds are classified as equity equity in a cost-efficie
Slide 42: Ørsted's outstanding bonds
Ørsted’s outstanding bonds Outstanding Fixed/Floating Green Allocated to green Avoided emissions (thousand Bond Type Issue date Maturity Face Value Coupon Coupon payments amount rate bond projects (DKKm) tons CO2/year) Senior Unsecured Nov. 2017 26 Nov. 2029 EUR 750m EUR 750m Fixed 1.5% Every 26 Nov
Slide 43: Inflation and interest rate risks
Inflation and interest rate risks Fixed nominal Inflation-indexed Merchant 2023-2032 nominal cashflows from Active use of debt & hedges Offshore & Onshore assets to mitigate inflation risk 15 % 50 % 20 % 30 % 25 % 45 % 35 % 50 % 30 % Revenue incl. hedges Other EBITDA EBITDA Debt Hedges of future deb
Slide 44: Glossary
Glossary Balancing costs Ineffective hedges The cost of settling intraday differences between expected (day- Expected overhedging of future periods, which we, according to IFRS, ahead) and actual (real-time) production have to recognise already in the quarter where we report Intermittency costs Pric
Slide 45: Investor Relations contacts
Rasmus Hærvig Henriette Stenderup Head of Investor Relations Investor Relations Coordinator rakol@orsted.com hnste@orsted.com Sabine Lohse Valdemar Høgh Andersen Lead Investor Relations Officer Investor Relations Officer sablo@orsted.com vehan@orsted.com